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What was your net profit on the strap

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The common stock of the Avalon Corporation has been trading in a narrow range around $40 per share for months, and you believe it is going to stay in that range for the next 3 months. The price of a 3-month put option with an exercise price of $40 is $3, and a call with the same expiration date and exercise price sells for $4.

Suppose you put a strap and the stock price winds up to be $42 at contract expiration. What was your net profit on the strap?

Reference no: EM132481515

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